# What investors need to learn from Germany’s stock market crash
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2017-07-27
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: German Stock Market Crash: Timely Reminder to Broadly Invest
Meta Description: Tom Elliott, deVere Group’s International Investment Strategist, discusses the recent German stock market crash and the importance of diversifying portfolios.
URL: https://financedigest.com/what-investors-need-to-learn-from-germanys-stock-market-crashhtml

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The German stock market crash is a timely reminder of the need to broadly invest, affirms one of the world’s largest independent financial services organisations.

The comment from Tom Elliott, deVere Group’s International Investment Strategist, comes as the DAX, Germany’s top stock index, was nearing the red after shares in the country’s largest car makers dropped over a fresh probe into the diesel emission scandal.

Mr Elliott observes: “Eurozone stock markets have felt the pain of a strong currency in recent weeks, as investors think that improving economic data will force the ECB to curtail its bond-buying program prematurely and – if inflation picks up – lead to interest rate hikes.

“But the DAX 30, the key German [stock market](https://www.financedigest.com/yes-winning-the-euros-really-can-help-your-stock-market.html "Yes, winning the Euros really can help your stock market") index, now has an additional problem that has contributed to recent falls. Its motor sector – led by BMW, Daimler and Volkswagen- is under a cloud as more jurisdictions line up to fine the companies over diesel emissions. Last week, the Mayor of [London announced](https://www.financedigest.com/fintech-week-london-announces-major-fintech-voices-taking-to-the-stage-this-june.html "Fintech Week London Announces Major Fintech Voices Taking to the Stage This June") plans to seek compensation from Volkswagen after the true scale of the company’s diesel-fuelled cars’ contribution to the city’s air pollution became known. The [sector is at risk](https://www.financedigest.com/incombustible-infrastructures-dousing-the-risk-of-spreadsheet-fires-in-the-financial-sector.html "Incombustible infrastructures: dousing the risk of spreadsheet fires in the financial sector") of punitive fines across the world.”

He continues: “A further risk is that the ‘Made in Germany’ brand suffers more generally.

“However, while this is embarrassing for the [German auto](https://www.financedigest.com/german-chancellor-meets-auto-battery-bosses-in-mobility-summit.html "German chancellor meets auto, battery bosses in ‘mobility’ summit") sector, and for German exporters more generally, it is likely to be a passing phase. The fines will be absorbed by shareholders, and meanwhile the German auto sector will return to the real long-term battle: is there a durable [market for high quality](https://www.financedigest.com/eu-watchdog-backs-esg-quality-label-for-market-benchmarks.html "EU watchdog backs ESG ‘quality label’ for market benchmarks"), driver-driven, private cars?

Mr Elliott goes on to say: “German – and European autos’ [biggest threat](https://www.financedigest.com/credit-squeeze-biggest-threat-to-economic-outlook-fidelity-international-says.html "Credit squeeze ‘biggest threat’ to economic outlook, Fidelity International says") comes from technology from the U.S. – in the form of driverless cars and [battery cells](https://www.financedigest.com/bmw-to-make-solid-powers-battery-cells-under-expanded-agreement.html "BMW to make Solid Power’s battery cells under expanded agreement"), amongst other factors – as well as changing social habits, which include car pooling and young adults driving less in developed economies.

“The German [stock market](https://www.financedigest.com/frothy-stock-market-valuations-a-dash-for-cash-and-digital-money-all-on-bank-of-englands-risk-radar.html "Frothy stock market valuations, a dash for cash and digital money – all on Bank of England’s risk radar") crash is a timely reminder of the need to broadly invest so that portfolios will have exposure to the young companies likely to benefit from driverless cars for example.”

He concludes: “Diversification of portfolios across sectors, asset classes and regions will ensure investors are best-placed to take full advantage of the present and [future opportunities](https://www.financedigest.com/blood-thawing-systems-market-analysis-growth-opportunities-future-demand-and-leading-players-updates-by-forecast-2030.html "Blood Thawing Systems Market Analysis, Growth Opportunities, Future Demand and Leading Players Updates by Forecast 2030") and to mitigate the risks.”


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